Douglas Bauer: Yes. That’s a really good question. The homebuilders typically — we sell, we just happen to sell the most expensive durable good that our consumers are going to buy, right? And you hit the nail on the head. And what’s interesting to me is the reaction by The Street in the construct, because as we saw at the beginning of the year, there is a very rapid increase in interest rates, right? The Fed increased rates seven times in 2022 that was such a psychological effect on the consumer that it really caused a bigger pause. You saw what happened in the first part. And you saw what happened in 2023. The consumer adjust, interest rates don’t drive a homebuilding market, and that’s the thesis that the market is missing.
The consumer and the homebuilding market is driven by jobs, and household formations. And the consumer ultimately adjust. So this increase in rates lately and the volatility that we’ve seen, obviously it wasn’t — hasn’t been as volatile as significant of an increase that we saw in 2022, it’s the reason we’re still seeing very good demand. It’s seasonal but I mean we opened several new communities in last couple of weeks with pre-qualification less from 10 to 80 people. So the market for the homebuilders is very solid. And yes, there is some temporary puts and takes, and maybe a little longer conversion cycle, but your question is spot on. You, you, you’ll see the consumer adjust and, and we’ll move into the spring selling season. And, and, and the beauty of the homebuilders is we have these levers to pull to continue to move product.
Tyler Batory: Okay, great.
Tom Mitchell: Hi, Tyler. This is Tom.
Tyler Batory: Yes.
Tom Mitchell: I’m going to add just a little, little color to that as well to try to put it into perspective, I think everybody does the math based on medium household income, I think it’s important to note that our typical buyers are much more significantly qualified and have higher income levels than medium household incomes. And it gives them more purchasing power. And if you think about it, if you go back to Q2, interest rates from the end of Q2 to the end of Q3 are up about 100 bps. But on our average loan amount that’s about $300 per month and the incomes of our qualified buyers really can absorb that, that’s why we don’t see as big of a effect on that demand profile.
Tyler Batory: Okay, great. Appreciate that. My, my follow-up question on, on ASP, it’s closing ASP. You talked about price increases in two-thirds we have communities during the quarter, looks like ASP was a touch lower than the, than the guide. So I’m assuming there’s a little bit of mix, mix there that’s impacting that. So now let’s talk about pricing trends and then, then also interested how you’re thinking about, about ASP next year in 2024 as well?
Glenn Keeler: Yes, Tyler, this is Glenn. So we didn’t talk about it with some modest price increases that two-thirds of the communities in the quarter. But that ASP you’re right, it was a little lower than our guidance, and that was purely mix, the additional deliveries we pulled into the quarter were — they came from largely from our Texas and Charlotte markets, and so that was just a, a mix factor, and ASP going into 2024 as I discussed on previous calls will be lower than, than 2023. But again, that is just more mix related because you’ll have a heavier weighting towards Texas and Charlotte than, than the current mix. A lot of new communities open this year and next year in those markets. That is just driving that ASP. So I think I had mentioned on the last call, something around $625,000 to $630,000 ASP range for next year and that still feels like a good target.
Tyler Batory: Okay. That’s all from me. Thank you for the detail.
Glenn Keeler: Thanks, Tyler.
Operator: Our next question comes from Carl Reichardt with BTIG. Please go ahead.
Carl Reichardt: Thanks. Good morning everybody. I missed the absorptions for entry level during the quarter, Glenn. But I also wondered, so you’ve I think raised prices in two -thirds, modest price increase two-thirds of your storage. Well, can you break that out between move up and entry level in terms of the, the price increases you’ve put in place?
Glenn Keeler: So, yes, that entry level absorption Carl was 3.7% and it was 3.1% for both first move up and second move up. And we don’t have the breakout in front of us between price increases between those cohorts. But I, I think it was probably more on the move up side, you would see a higher percentage of those price increases, but it was just more really market dependent, more than anything. So like in Charlotte, for instance, where we’re more entry-level first move up that was a market where you saw price increases across the board really just because of the level of demand. So I would say it was fairly broad based.
Carl Reichardt: Okay. Thank you, Glenn. And then, when it was down there in August, we talked a lot about the premium entry level as a, as a differentiating point for you product wise. And, and I’m interested again you do spec but you’re trying to build that product up, so that, that customers can still choose options upgrades. So within the move up cohort and the premium entry-level cohort, have you begun to notice trade down effects. So people taking fewer options and upgrades in their homes and or a shift into smaller homes, in either cohort as you go to offset the affordability challenges that, that we see out there. Thanks.
Tom Mitchell: Hey, Carl. It’s Tom. Good questions obviously. Because we do such a great job on our option and studio business, I mean it’s a big component of, of our offering. In Q3 we did not really see any decline relative to options spend. On closings we averaged $76,000 per home, which was about 11.2% of revenue year-to-date, we’re at 0.6% of revenue with that dollar amount being about $81,000 per house. So we’re still seeing a significant amount of spend in our design studios because people in today’s market still do want to personalize their home, and it’s a driving factor. You saw we introduced the Bobby Berk collection, that’s going to be very popular and a big driver. And it will also help us streamline and be more efficient through our studio.
So we’re excited about that. We have put into the marketplace some smaller footages because we’re very aware of attainable price points, and so that is something that we are seeing that people are accepting smaller footages for affordability reasons.
Carl Reichardt: Great. Thank you so much, Tom.
Operator: Our next question comes from Jay McCanless with Wedbush Securities. Please go ahead.
Jay McCanless: Good morning, everyone. Doug, you made the comment earlier that you see the M&A environment is limited. Could you maybe unpack that a little bit. Is it limited by the valuations you’re seeing or just not the right — so any color there would be helpful.
